1 Asmizon Productions forecasts the following demand for a p

1. Asmizon Productions forecasts the following demand for a product (in thousands of units) over the next five years.

Year

1

2

3

4

5

Forecast demand

55

53

58

61

59

The operations manager currently has eleven machines that run on a two shifts (6 hours each) basis. Fifteen days each year are available for scheduled maintenance of all the equipment. During the scheduled maintenance time, there is no process output. The production facility assumes that there are 255 workdays in a year. Each completed good takes 45 minutes to produce.

a.   What is the capacity of the factory in machine hours and total units?

b.   At what capacity levels (percentage of normal capacity) would the production company be operating over the next five years based upon the above forecasted demand? (Hint: compute the ratio of demand to capacity each year)

Solution

a)

(255-15days)(2 shifts/ day) (6 hours/ day) (11 machines) = 31680 machines hours or

31680 * 60   / 45   = 42240 units

b)

year 1

55,000 / 42240 = 1.30

year 2

53,000 / 42240 = 1.25

year 3

58,000 / 42240 = 1.37

year 4

61,000 / 42,240 = 1.44

year 5

59,000 / 42,240 = 1.40